According to national news reports, demand for housing is rising — and housing prices along with it. That’s good news for homebuilders and the overall economy, but it’s important to put those reports into context, especially when it comes to the lower end of the housing market, where people are struggling to find a home.
At nonprofit NeighborWorks Waco, where we work to build stronger neighborhoods through homeownership and other quality housing opportunities, the comeback that we’re seeing in housing still has a long way to go.
Five years ago we were building 22 houses per year; last year, we built two, and this year we’re building seven. These single-family homes are designed to be affordable — with a price between $80,000 and $110,000 – each with three bedrooms, two bathrooms and a brick exterior.
Low-income buyers still have not come back into the marketplace. That’s partly because of tighter credit standards and the need for larger down payments, but it also reflects a lack of long-term confidence in the job market and a fear that buying a home, if one is laid off, could lead to foreclosure.
In our experience at NeighborWorks Waco, where we’re heavily involved in credit counseling, financial literacy and homebuyer education, most people who have gone into foreclosure first suffered a loss of income — primarily loss of a job — or an increase in expenses from a health condition or a divorce. Ballooning mortgage payments were a much smaller factor overall.
In counseling potential first-time homeowners, our primary concern is that they make a financially responsible decision. For many people, renting makes more sense.
Yet homeownership has benefits for both homeowners and the broader community that renting does not provide. That’s why the availability of housing that is affordable to those with low incomes is so important.
Homeownership, for instance, is typically the best way to build wealth over time — to create an asset that can be passed on to the next generation. Homeownership also leads to the improvement of properties in a way that renting does not. No matter how responsible a renter is, a renter rarely improves the landlord’s property.
For a homeowner, home is both a place of pride and a place whose value can typically be increased by improving its condition. Homeowners also relate to their neighbors and neighborhood differently because they share a financial stake in that neighborhood. That stake depends on one another.
Whether owned or rented, however, stable affordable housing is crucial to any community’s well-being. It’s crucial to the performance of the school system, because children in stable homes learn and achieve more in school. It’s essential to public health because healthy habits take root more easily there, and it’s vital to public safety because stable homes make communities safer.
That’s why I was pleased to be in Washington, D.C., last month to join leaders of nearly 200 housing and community development organizations from across the nation to launch a movement called Home Matters (www.HomeMattersAmerica.com). It’s a unique national initiative that aims to unite America around the essential role that a home plays as the bedrock for thriving lives, families and a stronger nation. The launch was spearheaded by the National NeighborWorks Association, of which NeighborWorks Waco is a member, with crucial support from Citi Community Development and Wells Fargo.
Also participating in the launch of Home Matters were Secretary of Housing and Urban Development Shaun Donovan and a bipartisan group of members of Congress representing a broad political spectrum. Their presence — even in a polarized Capitol — underscored that Home Matters no matter what your political beliefs.
Housing must lead our economic recovery because it has so much impact on the economy. As the housing market improves, however, we must ensure that it offers opportunities at all economic levels — not for irresponsible borrowing but for responsible borrowing at all levels of affordability.
The key is affordability, and that key opens the door not only to stable housing for individuals but to community improvement. The more people can afford stable housing, the better off Waco will be.